Singapore (Platts)--22Jun2012
Chinese May thermal coal imports surged 49% year-on-year to 13.5 million mt, the highest since December 2011, but any further rise imports will be limited due to sagging demand because of high stockpiles at ports and power generators, Barclays said in a research note.
The high imports came despite weakening underlying domestic demand for thermal coal as the arbitrage window between the Chinese domestic market and the international markets remains wide open, Barclays analysts said.
"We expect Chinese imports to remain at the healthy levels seen in Q2 so far as long as the arbitrage window remains open, but to not be able to rise to levels that soak up a meaningful amount of supply to push up international coal prices from current low levels," the analysts said.
China continued to import a large amount of thermal coal from the US this month, up more than double year-on-year, while about 99% of Colombian imports that came into China so far this year arrived in May, they noted.
Comparatively, China did not buy any Colombian coal in May of last year, they said.
Even though the arbitrage window is wider than at any point last year, imports have failed to rise above the levels seen in the fiscal fourth quarter of 2011, they said.
A Barclays analyst said by phone that total Chinese thermal coal imports stood at around 25 million for April-May this year, while it was 35.7 million mt for the entire fiscal fourth quarter of last year.
The analyst said Chinese power plants and ports are estimated to have stockpiles of nearly 30 days of coal burn.
Bituminous thermal coal imports from Australia grew five and a half times year-on-year as Newcastle prices tumbled, they said.
Platts FOB Newcastle 6,300 kcal/kg GAR prices have slumped 25% so far this year, data showed.
--Deepak Kannan,
--Edited by Jonathan Dart,
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